News: Richest 1% of world own more than the rest combined

Mon, 18 Jan 16


Oxfam is calling for urgent action to tackle global inequality, as new research reveals that 1 per cent of the world’s population own more than the rest of it combined.

The study has been published by the charity ahead of the annual gathering of the world’s financial and political giants in Davos and warns of "runaway inequality". Indeed, since 2010, the wealth of the poorest half of the world’s population - 3.6 billion people - has fallen by a trillion dollars, a 41 per cent drop that has occurred despite the population rising by 400 million people.

Now, 62 people own as much as those 3.6 billion people - down from 80 last year and 388 in 2010. The wealth of those richest 62 has increased by more than half a trillion dollars to $1.76 trillion in the last five years.

Mark Goldring, Oxfam GB Chief Executive, says: "It is simply unacceptable that the poorest half of the world population owns no more than a small group of the global super-rich - so few, you could fit them all on a single coach."

Ahead of last year’s Davos, Oxfam predicted that the wealthiest 1 per cent would soon own more than the rest of us by 2016, but this actually came true in 2015, a year earlier than expected. The inequality extends to gender as well, notes the charity: just nine of the richest 62 are women, while females make up the majority of low paid workers around the world.

There has been some progress made in tackling poverty: the number of people living in extreme poverty halved between 1990 and 2010. The average annual income of the poorest 10 per cent, though, has risen by less than $3 a year in the past quarter of a century, which equates to an increase of less than a single cent a year in individuals’ daily income. Had inequality within countries not grown between 1990 and 2010, notes Oxfam, an extra 200 million people would have escaped poverty.

One of the other key trends highlighted by the report is the falling share of national income going to workers in almost all developed and most developing countries and a widening gap between the top and bottom of the income scale. By contrast, the wealthy benefited from a rate of return on capital via interest payments and dividends that has consistently been higher than the rate of economic growth.

Oxfam is calling for a "three-pronged approach" to the solution, cracking down on tax dodging, increased investment in public services and action to boost the income of the lowest paid. Specifically, it urges for an end to "the era of tax havens", which has seen increasing use of offshore centres by rich individuals and companies to avoid paying taxes.

"Tackling the veil of secrecy surrounding the UK’s network of tax havens would be a big step towards ending extreme inequality. Three years after he made his promise to make tax dodgers ’wake up and smell the coffee’, it is time for David Cameron to deliver," adds Goldring.

Indeed, at the G8 in 2013, David Cameron promised that both the UK and the UK’s Overseas Territories and Crown Dependencies would introduce public registers of companies’ owners in an effort to crack down on the use of shell companies to avoid tax. The UK has fulfilled that promise, says Oxfam, but only Montserrat has followed suit.

How much is stashed in offshore accounts? Globally, Oxfam estimates a total of $7.6 trillion.

As much as 30 per cent of all African financial wealth is estimated to be offshore, costing an estimated $14 billion in lost tax revenues every year. This, Oxfam explains, would be enough money to pay for healthcare for mothers and children that could save 4 million children’s lives a year and employ enough teachers to get every African child into school.

"Allowing governments to collect the taxes they are owed from companies and rich individuals will be vital if world leaders are to meet their new goal, set last September, to eliminate extreme poverty by 2030," concludes Goldring.

Indeed, if tax were paid on the income that the super-rich generate, an extra $190 billion would be available to governments every year.

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